Koskinen sits for first congressional hearing, with tough questions guaranteed on IRS, Obamacare – Tax reform cheerleading groups are not giving up an overhaul

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DRIVING THE DAY: KOSKINEN ON DECK. Newly-minted IRS Commissioner John Koskinen will face off against Ways and Means lawmakers this morning — the first congressional hearing for him since getting confirmed for the post in December. Despite his generally well-liked position among both Republicans and Democrats, Koskinen is expected to face tough questions on Obamacare and the tea party targeting scandal. Here’s what Morning Tax is looking for…

1) 501(c)4 rules: House Ways and Means Chairman Dave Camp has been unrelenting in his criticism of how the Treasury and IRS issued proposed guidelines for 501(c)4 nonprofits before his committee completed its investigation into the tea party targeting controversy. The anger among Republicans about the regs is growing into nearly a separate issue from the targeting with criticism that the rule change will stifle free speech and one-upped Congress. This is a potentially good point for Republicans as many on the left are also wary of the rules impact on get out the vote efforts. Koskinen was not around when the regs were issued but he will be able to provide insight for any final regs — along with the Treasury — so if Camp (or more aptly Rep. Charles Boustany who is chairing the subcommittee hearing) can make this into a sticking issue among the public that could help encourage the Obama administration to pare down what is considered political activity.

2) Is Koskinen measuring up?: He’s been in office for just over a month, which will help shield him from any real criticism — for now — but that doesn’t mean it won’t eventually come. Daniel Werfel was initially praised as a near godsend for the IRS among both parties, but Republicans were quick to criticize (around the one-month mark, actually) that the agency was too slowly responding to requests for documents. It will be telling to see how Republicans view the new commissioner if they lay into him for a slow pace or praise the IRS for being responsive to congressional inquiries.

3) Obamacare: We know Republicans are going to have many pointed questions on the health care law but do any Democrats jump on board with concerns over security or tax credits? It’s mostly Democrats in tight races that are showing concern with the law — and that’s mostly in the Senate, to be sure — but if Koskinen hears wariness from the left-side of the dais that could hint toward a spreading unease over how the law is being implemented.

BAUCUS IS GOING, GOING….and almost gone. Baucus’s last day before he jets off to China (let’s hope he bought some guide books so by the time he lands he’s an expert) is expected to be Thursday — that’s when Senate Majority Leader finagled a vote for. But that imminent departure means the chairman is leaving many things on the table for Sen. Ron Wyden to take up when he assumes the chairmanship including extenders, an SGR extension and the IRS investigation. Sen. Orrin Hatch told your Morning Tax-er that his staff is deciding the best way forward to ensure that any findings from the committee’s probe into the tea party targeting is bipartisan.

“I don’t think it will. We’re worried about how to continue it as a bipartisan process but we’ll probably have Sen. Wyden join us,” Hatch, a Utah Republican said. “I think we will, both sides work well together.”

NUMBER WATCH: 600,000. The number of documents the IRS has sent to the Senate Finance Committee.

AND IF YOU’RE INTERESTED IN A TRIP DOWN MEMORY LANE. Check out the Montana Standard’s recap of Baucus’s three-and-half decades in Congress: http://bit.ly/Ms35Gc. If you have a fave Baucus memory, send it this way for a possible Morning Tax mention!

TAX REFORM IS DEAD? DON’T TELL THE CHEERLEADING GROUPS. Our Kelsey Snell reports, “It has been a three-year process of selling, goading and cheerleading that, so far, has yielded few measurable results…The primary success of the groups [ACT, LIFT, BUILD, RATE] may be driving home the idea that corporate tax reform should cut tax rates, allow companies to bring home foreign earnings at a discount rate and do it all without raising any new revenue. The companies behind the groups have shelled out millions of dollars in recent years just to keep lower corporate taxes in the policy mix. The Alliance for Competitive Taxation, also known as ACT, spent $1.7 million in 2013, according to the congressional lobbying database. The Lift America Coalition, a group narrowly devoted to easing international tax rules, reported $180,000 in lobbying expenses." http://politico.pro/LOTIjT

HAPPY WEDNESDAY. Anyone headed to the WPC dinner tonight? Should be a good time. Send tax gossip, scoops or actually tax advice now that the filing season is open. You can find me at lfrench@politico.com or @LaurenNFrench on Twitter. As always, please follow @POLITICOPro and @Morning_Tax.

HOUSE: Meets at 10 a.m. with votes expected around

SENATE: Not meeting today.

HIGH TAX REVENUES EXPECTED ALONG KEYSTONE ROUTE IF OBAMA GIVES NOD TO PIPELINE. Here’s some news that could perhaps sway support toward construction of the Keystone pipeline: cash — and lots of it — for localities along the route. The State Department report from last week found that in the first year of operations alone, 27 counties in Montana, Nebraska and South Dakota could generate $55.6 million in new revenues from property taxes. With just six counties along the route, Montana has the fewest, but its $26 million estimated property tax revenue is far higher than the other two states at $14.2 million more than South Dakota and $8.1 million more than Nebraska’s seven counties. Cities and towns were among the hardest hit during the recession and still struggling to this day to fill back up their public coffers, meaning millions in extra revenue could help sway support toward the pipeline in states along the route. “This Keystone tax windfall could help pay for new schools, new roads, and many other local priorities,” said Brian Straessle, spokesman for the American Petroleum Institute — a group unabashedly pro-pipeline. The final White House decision to either green light or shelve the pipeline is expected to come later this year.

POT TAX REVENUES GOING UP IN SMOKE? A major selling point behind Colorado’s push to decriminalize marijuana could face a setback if the federal government doesn’t loosen restrictions on banks accepting pot profits. Colorado State Sen. David Balmer told FOX this week that the state could be in danger of losing a good portion of the sales tax revenue it hoped to collect from newly legal marijuana sales as banks and credit card companies are wary of working with marijuana sellers. The problem is not a new one. All-cash businesses are always riddled with unreported and often untaxed transactions but the marijuana industry faces unique setbacks because of anti-money-laundering federal regulations. Those rules traditionally come with big violations if banks accept clients breaking federal law — though Attorney General Eric Holder did give the nod to banks to begin working with the sellers.

National Cannabis Industry Association deputy director Taylor West says nearly half of their dispensary members do not have access to banking services. Despite this, she says most sellers are doing their best to comply with state tax regulations, even if it means adding additional security to their business expenses. The state expects to receive nearly $67 million this year. The FOX story: http://fxn.ws/1evkaK9

SENATE FINANCE APPROVES TAX COURT NOMINEES. The panel unanimously voted Tamara Ashford and Paige Marvel out of committee yesterday and the nominees now head to the Senate floor for a final vote. If approved, Marvel would be in her second term on the court. Ashford is currently a deputy assistant attorney general at the Department of Justice.

CHAFFETZ TAKES LEAD ON ONLINE SALES TAX. Republican Rep. Jason Chaffetz is working on language for new online sales tax legislation with House Judiciary Chairman Bob Goodlatte. Chatting with Morning Tax, he said the new measure would give more authority to states to decide how they implement sales tax collection from out-of-state online retailers and could possible remove the small-seller exemption included in the Senate-passed Marketplace Fairness Act. He said it would likely be “months” before any new legislation is introduced but any measure would likely have more support among conservatives because of Chaffetz’ bona fides with the right-wing of the Republican party.

“I believe it’s a states’ rights issue. I want to give them flexibility,” he said. “We haven’t hammered out actually what it would be, but there is a concern about small sellers and will they have to go through 34 different audits. There’s got to be a way to craft it so it is more reasonable and workable.”

A spokesperson for Goodlatte said he has received “several creative ideas from interested parties and members of congress and at this point [he] is still in the process of gathering ideas.”

QUICK LINKS:

-- Ever wonder what keeps those European tax experts up at night? Apparently the economies in Russia, Italy, Ukraine, Poland, Greece and Portugal top the list. CGMA Magazine has a survey with interesting insights: http://bit.ly/1ilzsRK

-- A vehicle miles tax is likely to land in any highway bill House Transportation and Infrastructure Committee Chairman Bill Shuster said. He’s already dismissed the idea of increasing gas taxes. More: http://bit.ly/1ilAsFy

-- “After several days of talks with their members, House Republican leaders have not been able to identify a debt ceiling package that could pass with only GOP support, according to multiple senior aides,” Jake Sherman and John Bresnahan report. http://politi.co/1fsHLZY

-- Reuters reports, “The U.S. government has been bringing more criminal tax prosecutions against Americans under President Barack Obama than under President George W. Bush, with a surge in tax refund fraud partly to blame, a non-partisan watchdog said.” http://bit.ly/1kPIlEx

-- “Boeing lobbyists are throwing a 'thank you' party for Washington state lawmakers who helped provide the company with billions in tax breaks,” the AP reports. http://bit.ly/1iqRRgx

DID YOU KNOW? Heavy metal band Metallica once played a live concert in Antarctica — the only band to have ever done so.